Boutique Investment Banks vs. Bulge Bracket Banks
“I work for a boutique investment bank,” responded Todd cockily, smirking and now pulling up his pants over his temporarily retreated beer-gut, illustrating that this was one of those hardcore New York male-anorexia and exercise weeks. He would be spilling out of pants next week no problem after this weekend’s depression-gorge.
Todd paused and collected himself. “Yeah, I mean, I just really wanted to be closer to the deals, you know. Get more exposure.”
-The Boutique, Leveraged Sellout
When most people out there decide they really want to do investment banking, they usually go for the big names first: Goldman Sachs, Morgan Stanley, even UBS LA.
But occasionally someone asks me about the boutiques out there, whether they’re referring to the “top” ones like Evercore and Lazard, middle-market banks, or true regional boutiques that just have 1 or 2 offices.
Going to a top name is just not an option for everyone. If market conditions are bad, if you have no previous finance experience, or if you are trying to switch into investment banking from engineering or law or other fields, you might have to go with a boutique.
But are there any cases where a boutique would actually be preferable to a bulge bracket? Should someone actually want to go to one?
The Main Difference Between A Bulge Bracket And A Boutique
People most commonly cite the size of deals as the difference. While Goldman Sachs may advise on multi-billion dollar acquisitions, a boutique will usually stick to deals under a billion dollars and often far less than that. In the world of corporate finance, $50 million is chump change.
Other commonly cited differences are working in smaller groups, getting more responsibility, and being more than just a “number-cruncher” at a boutique.
While these can be true sometimes, the main difference at the Analyst level is that your boutique experience will be much more random.
Fooled By Randomness
Make no mistake: you can get tremendous experience at a boutique and learn more about actual deals than you might at a bulge bracket. But you might also spend all your time creating pitchbooks and doing useless work if the senior bankers can’t make rain.
I’ve seen both scenarios. One friend at a boutique basically learned the entire job in 3 months because he was effectively running a deal by himself.
Another friend spent most of his time making pitchbooks, making coffee (no administrative staff, thank you very much) and did deals that were so small he never learned much.
Don’t assume that you will get a “better experience.” Your chances of getting good deals to work on and having good exit opportunities are much higher at a bulge bracket.
Ok, But Is It The End Of The World If I’m Working At A Boutique?
No. But if you do go that route, you should very carefully investigate the work environment, dealflow, and everything else before you jump into it blindly. To get a more accurate view, try speaking with Analysts and Associates rather than higher-ups.
No matter how much diligence you do, however, the sad fact is that there will be time lag between when you interview and when you start, and a lot can change in a year… or even a few months.
Even at a great bulge bracket office like UBS LA, the departure of a few “stars” caused much havoc, and the effect is only more pronounced at a much smaller investment bank.
Still, you should do your homework as much as possible.
But Still, Is There Any Reason I Would Want To Work At A Smaller Bank?
I strongly recommend that you spread your net wide and consider all your options. Unless you have some kind of personal connection at a boutique, though, there is little reason to prefer it to a big name bank.
Lifestyle is typically not much better. Yes, sometimes there are one-off cases of Analysts only working 60 hours a week… at certain offices. But at the “top” names like Evercore, investment banking analysts work bulge bracket hours. And once you get up to around 80 hours a week, there’s honestly not much difference between 80 vs. 90 anyway.
You will have exit opportunities, but you are more limited because certain firms always go to bulge brackets first, so Analysts there will get preferential treatment.
At top boutiques and middle-market banks, the pay will be comparable to bulge brackets, but at smaller regional places, it can actually be significantly less… as in, 50% less in some cases.
The only situation where you might want to pick a boutique instead is if you have offers from multiple banks, are reasonably confident the boutique will give you good work, and just like the people or work environment a lot more after thorough investigation. Your team is important, and great experience is not worth it if you want to shoot yourself repeatedly because you hate your co-workers.
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Hello, the site is great. What are your thoughts on Brown Brothers Harriman? Reputation, work, exit opportunities. Thank you!
Don’t write about specific banks but they would be on-par with other MM firms like Piper Jaffrey. Probably a bit less work and lower pay than bulge brackets.
Thank you
Where would an institution with around 700 million in assets fall within the boutique spectrum? Is that unreasonably small?
Also, how does interning at a boutique look on your resume if you plan to apply for FT positions are MM or BBs?
Hey
Can you help me pick out good boutique investment banks in India? Also, cold calling boutique banks outside India wont land me a job, right? as I do not have valid work visa for that particular country or is it still worth a try?
Thank in advance!
I am not familiar with boutique IB names in India, but this article might address your concerns http://www.mergersandinquisitions.com/investment-banking-india/
Yes I’d say so, you can still try but I don’t think that’s effective. I’d say focus your efforts on landing an IB job in India, and network w bankers. If you have banking contacts outside India, contact them
just wondering, at two MM’s like BMO and HSBC what would you say the pay is like? (in nyc)i’m assuming 60k start + 20-30k bonus? on average
Starting is probably a bit higher but it depends on your division. Ballpark ~70K-80K starting but have heard some hv higher base
What are your thoughts on a mid-market advising group at a bulge bracket? I will not mention the name of the firm, but I have been offered an analyst position with their mid-market IB group. Considering that I am still working at a bulge bracket, can I leverage this into a good exit opp?
Possibly, yes, but in general you should avoid those groups because they get very few resources since they are not the core focus of the firm. Better to go to a middle market bank if you want to do middle market M&A.
Have you heard of the investment bank, Signal Hill Capital? http://www.signalhill.com? What are your thoughts on them?
Haven’t heard of them so can’t comment, but deal list looks fairly legitimate
Great article and many thanks for this.
What do you think of OMAM – https://www.omam.com/index.aspx? Is it a good place to learn?
Hi,
I recently got a job offer as a full time associate at a boutique i bank that specifically only deals in ‘private placement of securities’. The manager also said that they’re typically only dealing with ‘private equity deals’ I can’t figure out what kind of work would I be exposed to. Any ideas?
I presume the IB you’ll be working for is an intermediary between those seeking to raise money (PE funds) and various investors (LPs) who may be interested in investing in the PE fund. You might be helping PE funds to raise money. Such firms are also called private placement agents. A few placement agents are structured as groups within large IB firms and more frequently as separate boutiques (e.g. Atlantic-Pacific Capital, Campbell Lutyens, Probitas Partners, Touchstone Group). http://en.wikipedia.org/wiki/Private_placement_agent
Kind of work you are exposed to – depends on your role. Have you spoken to peeps at your firm re details of what you will be doing etc? They will know better than I do!
Looks exactly like the job description. Is this job considered a senior level position, and are compensation often based on commission or just fees? Can’t seem to find much on the net concerning compensation.
Hi,
Incredibly helpful site! I am currently a Junior studying Finance at Virginia Tech with a 3.6 GPA. My only experience in banking will be an externship I will be doing at Wells Fargo in Charlotte. I have worked an internship as a financial researcher at a small financial services company. Citi comes to recruit at my school in January. Do you think I have a legitimate shot of being interviewed by them? Main concern is GPA. I do have a lot of extra-curriculars and volunteer work. Also, if it doesn’t work-out with them, I will try my luck at investment boutiques. How hard is it to transition from a boutique to a bulge bracket firm?
Thanks a lot,
Ralph
1 question – your GPA is fine. You should network lots during Citi’s info session and apply. See how it goes
2 question – Not too hard if you know what you’re doing, have great deal experience under your belt and network loads
Would it be possible to work in a Boutique for a certain amount of years then move – via a possible successful application – into a Bulge?
(Aside from the MBA route.)
Further, how would one be able to network to get into Bulges while in a Boutique?
I know that ‘target uni’ pupils can via the various opportunities held, but I’m quite unsure how you could do it from one bank to another?
Just network within the industry.
Yes, of course.
I would like to know in which department a BBA graduate will most likely specialize in with regards to investment banking,as I have noticed in south africa you need a Bcom degree or CA(SA) to be employed in IB.I’m really stressed because I’m afraid that ill complete my BBA(in a top business school) and not get a job in investment banking because of what I have stated above.is there any websites you can provide for companies in SA that employ BBA graduates for investment banking?
I believe readers can provide better insights
Thank you for providing such useful insights, has this site (because I am new to it and unsure if it is run by one person or multiple) ever considered starting a mentoring program?
What sort of mentoring program are you referring to?
No, not yet.
Hi, I kindly appreciate your site and have one question regarding boutiques in Russia – do you know some?
We have a certain number of global bulge brackets subsidiaries here, but it’s hardly to find smth like Lazard and so on…
Readers may be able to offer you better insights into the matter…
Hey Brian
Im currently a 3rd year Finance student at University and came across a boutique I-bank while going through an online directory. Their website says that they are looking to hire an Intern, IBanking. However the page also says that we must send in a Resume/Cover letter highlighting relevant work experience. I don’t really have any I-banking experience. So how would I go about making my case in the cover letter ?
Thanks in advance
Talk about your business experience (finance experience in particular). Quantify your results.
I read something earlier that said making the switch from a boutique IB to a bulge bracket BB is fairly difficult. Why is this move so difficult if you’re doing the same type of work? I’ve seen people make the jump from completely different backgrounds like corporate finance or accounting backgrounds. Why do people say its more common to go from boutique to MM instead of going straight to BB from boutique?
It can be fairly difficult given the current environment and the scale of deals you do at boutiques. At BBs, you get exposed to deals of a larger scale and interviewers might want candidates who have had such exposure. This also explains why people say its more common to go from boutique to MM instead of going straight to BB from boutique. With the above being said, transitioning to a BB from a boutique can be relatively straightforward if you know how to spin your story, had some awesome deal experience, have established a strong network and have a solid reputation.
I was lucky enough to meet a partner of a PE firm after a bit of networking. It turned out the PE firm has just invested in a new project and a CEO has been appointed for the project.
There is an opportunity but its working on the financial modelling of the project not working within the PE firm modelling new investments. Obviously its a JV but I am just a bit worried the work will be more like finance work for an engineering project than finance work within a PE firm. Could I still spin the work experience (it will be finance natured)?
You can still spin it – I would not hesitate to accept an opportunity like that
I’m happy with your response because it tells me that this is more than I consider it to be. I am still finding it hard to see how this is related to PE / investment banking apart from the fact its a JV with a PE firm. There will be lots of financial modelling for me to do, its a brand new project. I did financial modelling in the finance team of a big energy company last summer, it’s the same story here – the work is relevant its just not got the name of a fancy bank, I guess after the work I could say the company was [insert name of PE firm] who took me on (as opposed to the name given to the JV).
Would this opportunity be better than a position as renewables / M&A analyst at a boutique?
Thanks so much for the help!
Could you tell me of your thoughts on the Demeter Group in San Francisco?
Haven’t heard of them before. Readers may be able to offer you better insights!